Google Likely To Shatter The Price Of Glass Ahead Of Widespread Release

Mark Rogowsky
, ContributorI write about technology, trends and companies on the leading edge.Opinions expressed by Forbes Contributors are their own.

Photo credit: Catwig

The tinkerers over at Catwig have performed what is believed to the first complete third-party teardown of Google Glass. While much of the reveal is just "gadget porn" for those into seeing the internals of new devices, perhaps what's most fascinating is how unremarkable the insides really are in terms of components. As a result, it seems probable the $1500 price paid by early adopters will be a distant memory when Glass gets its mainstream release next year. A price below $500 is likely; $299 doesn't seem out of the question.

What's inside?

Very broadly speaking, Glass is made of a number of smartphone-like components and several custom pieces that are necessary to accommodate the unique form factor. There's actually a touchpad on one of the earpieces so you can interact with the device without speaking to it. Behind that touchpad is one of the main circuit boards for Glass, where things like the Wifi and Bluetooth radios reside. The opposite side contains the battery to help balance the weight since the internals are very asymmetrical. Early adopters who participated in
Google's #ifihadglass promotion (and paid the full $1500) report the end result is a well-balanced designed.

Other than the earpieces, the magic of Glass is found in what seems to be a fairly standard, low-end smartphone camera and the display. That part is formed by taking what's called a microdisplay -- it's apparently 1/8 the scale of what's in the iPhone and has fewer pixels so it's smaller still -- and adding a small prism-like structure to reflect the display into the space in front of your eye.

So what do these things cost?

Without a detailed component list, we can't know what Google is paying for all the parts in Glass, but it turns out we can learn a lot about the cost of them from
IHS iSuppli, who tears down most modern electronics and figures out their build costs. Using their Galaxy S4 report, it's easy to pick out a lot of common pieces: memory, processor, Wifi/Bluetooth, battery, power management, sensors. On a low-end Samsung -- which is spec-ed higher on processing than Glass and has more in the way of sensors and a much larger battery -- those total $85.60. On Glass, they must cost less.

But Google also needs the microdisplay, which a quick check of Asian sources puts at no more than $30, and since it's doing custom boards and precision manufacturing, we'll assume its build costs are worst than Samsung. Add in some cost for packaging and all that probably costs at most another $60 on top of the above parts. Together, then, it's hard to imagine the manufacturing cost exceeding $150 and even if you account for the much smaller volumes of Glass vs. a typical smartphone, $200 seems an incredibly safe bet. That puts the build cost inline with a low-end Galaxy S4 or iPhone.

Why is it $1500 then?

So if Google is building these for so little, why are they charging consumers so much? It seems certain that the $1500 early-adopter price was designed to throttle demand and get only those most excited to buy now. Chairman Eric Schmidt told the BBC in April: "It would be fair to say that there'll be thousands of these in use by developers over the next months. And then based on their feedback, we'll make some product changes, and it's probably a year-ish away.""

Rather than try to immediately roll out a brand new product category to the millions, Google took the prudent path of selling to the thousands, building demand, working out the bugs and -- perhaps most significantly -- letting the world get used to a bunch of camera-wearing Glass-heads running around. A lot of the privacy debate around Glass has already been playing for months; by the time it ships in large numbers next year, that will be old news.

So what will we pay?

Personally, I'm not a Glass early adopter, although I believe there are a number of killer apps that justify the device even if nothing new or amazing gets created (1) first-person video, a la GoPro for shooting while on the move (2) in-car use as a heads-up navigation device. For $299, either would be compelling. But I'm fully certain the many developers hacking on Glass apps right now will have much more impressive things to do by next spring.

The question is what Google will charge for Glass so you can access those apps and the answer is harder to be certain of. With its Nexus tablets, Google has shown a willingness to operate on razor-thin margins, selling it for less than $50 above iSuppli estimates of the build costs. Samsung and
Apple, on the opposite end, are rarely as high as 3x build costs. So using that broad range and my cost estimate above, it seems like Glass will launch between $199 and $599. Any higher signals that Google doesn't want to sell very many, which seems unlikely by this time next year; the company clearly believes this is the next big thing. If it comes in at $299, it could actually add a noticeable bump to Google's corporate profits -- assuming it really is the next big thing.

(For a detailed look at the teardown, including lots of images, visit Catwig.)